In case you haven’t heard, the Opportunity Zone is a tax incentive that was passed as part of the Tax Cuts and Jobs Act of 2017. Opportunity Funds created in these zones allow investors to defer federal taxes on any recent capital gains until December 31, 2026, reduce that tax payment by up to 15%, and pay as little as zero taxes on potential profits from an Opportunity Fund if the investment is held for 10 years (Read more in a previous blog post). The tool could potentially help rebuild distressed and low-income communities around the country, if used cautiously and intentionally. So far, the tax breaks for certain investments in designated census tracts has already led to the creation of nearly $1 billion in new funds. The Treasury Department expects an overall $100 billion in private capital will be deployed through the tool.

As with various other tax incentives, the key ingredient to the successful investment of Opportunity Funds in our neighborhoods will be the core mission driving those investments. Without the right mission and goals guiding the investments, Opportunity Zones may become inequitable places that end up displacing existing residents, businesses, and jobs. In New York, there is already fear rising from Opportunity Zones being located in relatively posh, or gentrifying, neighborhoods “with projects from sponsors better known for luxury skyscrapers than affordable housing”.

We need local community groups, philanthropic foundations, and mission-driven organizations to steer the efforts in Opportunity Zones, with clear action plans and strategies.

To achieve this, city governments and community-based organizationsare working with third-party, independent advisors who can help prioritize projects and provide market expertise. The California Opportunity Zone Partnership, organized by non-profit Accelerator for America, with partnership of the State of California, Energy Foundation, Cities of Oakland, SF, San Jose, and LA will be doing exactly that by providing grants and technical expertise to three small-to- medium-sized California cities to help them attract inclusive investments into their Opportunity Zones. In Louiseville, KY, Accelerator for America has already supported the city to engage a consultant to create a replicable product—an Investment Prospectus—to enable the city to communicate its competitive advantages, initiate local partnerships, and identify sound projects that are ready for public, private and civic capital.

Here at Larisa Ortiz Associates, we conduct similar work in mixed-use urban places, often times located in Opportunity Zones, to help municipalities prepare an actionable and market-based investment prospectus that help guide private investment. As part of our SMAR2T Approach, we carry out comprehensive market analyses that account for challenges and opportunities in the physical environment, business environment, local administrative/ regulatory framework, and demographics.

The time is now – opportunity funds have 31 months to deploy the capital and investments need to be made by the end of 2021 to qualify for the minimum incentive to reduce their required 2026 tax payment (investors get a step-up in basis only if opportunity fund shares are held for at least five years). And to qualify for the full seven-year tax break (15% off tax bill), investments will need to be made by the end of this year!

If your city or neighborhood is looking to prepare a mission-driven and market-based investment prospectus for Opportunity Zones, get in touch with us!

Generation Z, people born between the mid-90s and mid-00s (approximately 14 to 24 years old) account for roughly 26% of the U.S. population. Increasingly, companies will need to adapt to this generation’s preferences, as their purchasing power is growing and they’ll soon become primary household decision-makers. Currently, Gen Z spends $143 billion per year and influences an additional $460.5 billion in spending by others. These numbers are only going up.

Of course, we would be remiss if we didn’t include the caveat that there is a lot diversity within the cohort: from recent immigrants, to young urbanites, to multi-generational small-town and rural residents. So as a business, ymmv (your mileage may vary), as the kids say.

However, as more and more researchers study this group, some common themes are emerging

Gen Z’s grew up with the internet and ever-advancing tech—“nearly ¾ of teens have or have access to a smart phone”—so they’re savvy with devices and the myriad apps that run on them. This has made them fairly adaptable, accepting of new products and trends and able to acclimate with ease.

Social media has become ingrained in daily life for Gen Z. It is used as a way to keep up with friends, family, and role models (often called “influencers” in the social media sphere). Social media and the internet have increased both the sociability and mobility of this generation. Gen Z “watches up to four hours of digital content and picks up their phones more than 160 times a day.” They are used to immediacy when shopping; they are comfortable picking up their phones to quickly research, cross-shop, or price compare, if need be. In fact, 84% of Gen Z use mobile devices while shopping in stores.

Next, and largely owing to the fact that they were raised with easy access to information, Gen Z is one of the most well-informed generations. They have grown up reading about social issues and ills, but also reading about waves of fresh innovations designed to tackle these issues. Living through the Great Recession during their formative years and growing up in the era of disruptive technology, this generation is both keenly aware of problems and hopeful that there are solutions on the horizon. They believe in the value of hard work to solve problems and get what they want (62% would like to start their own companies). Gen Zs also expect a lot from the businesses they frequent and the brands they use. Gen Zs research brands more than any preceding generation—from their comparative price point to their production chain. Gen Z consumers want to know a company’s values before buying its product.

“[This generation] self-educates through content consumption. They’re the driving influence in household decision-making. They have more information, more expertise, more insight,” says Beautycon CEO Moj Mahdara.

While this generation tends be extremely liberal in their social values (understanding of different expressions of identity, gender, sexuality, race, religion, etc.), they to have more traditional views regarding work ethic and success (good education, strong finances, desire for career advancement).

How does this translate to Gen Z’s consumer preferences and shopping behavior?

79% agree, “The way I present myself (through fashion, hairstyle, makeup) is fundamental to who I am”

49% would pay extra for a product that is consistent with the image they want to present

60% will support brands that take a stand on issues they believe in regarding human rights, race and sexual orientation

60% support brands that take a stand on issues they believe in regarding human rights, race, and sexual orientation

63% indicate that even when buying online, it is important to them that the retailer has a physical store nearby

What does this mean for businesses?

Gen Zs think and operate differently. Products and marketing campaigns that have appealed to past generations likely won’t appeal to Gen Z. Businesses will need to adapt to this generation’s brand preferences and shopping behaviors.

“Trying to gain the loyalty of Gen Z via traditional loyalty programs, cards and promotions is a losing battle. No matter how we asked Gen Z, they are simply much less interested in these things. For instance, the percentage who say a loyalty program makes a store special to them drops from 45% for Millennials to 30% for Gen Zs. The drop-offs are even more dramatic for interest in shopper cards and special events,” according to a report by Ernst & Young on Gen Z consumer behavior. “Getting these consumers to be loyal to your brick and mortar will be more challenging than ever.”

For businesses to survive and thrive, they will need to understand their consumers on a much deeper level. Relationship building and authentic brand positioning begins with understanding the types of people that visit that store (or district) on a human level: who are they, what types of values do they hold, and what services and products do they need and can afford. From this, businesses can determine ways to authentically differentiate themselves (offering unique goods and services to appeal to Gen Z), increase meaningful customer interaction, highlight their businesses’ social values, and/or form strategic partnerships with organizations they and their Gen Z customers support.

This CityLab piece elaborates on the continued retail debate — are we slipping into a mega retail apocalypse or is brick-and-mortar retail still a-ok? Includes a chart illustrating online resistant product categories.

As consumer purchasing journeys continue to evolve and the demand for brick-and-mortar stores contracts across the nation, failing Class-B and -C mall properties will have to get creative and diversify their portfolio to include non-retail uses if they are to continue generating revenue.

In fact, according to a 2017 JLL Retail Study, 30.0% of malls surveyed have started the process of making mixed-use environments by adding non-retail uses, with multi-family housing being the most popular choice.

Find out how cities around the country are embracing this mall-to-mixed use phenomenon and leveraging existing financing tools, planning capacities, and regulatory frameworks to support the redevelopment of malls as catalytic community development projects. From state laws expediting approval processes for projects featuring affordable housing to form-based codes and Tax Increment Financing districts, find out which states and cities are leading the charge in this article written by LOA Associate Nur Asri for the APA Economic Development Division News and Views.

Stay tuned as we update our mall-to-mixed use redevelopment tracker in January 2019! To read our previous update on mall-to-mixed use projects from 2017, click here. Or find out more about the expansion of WeWork in malls here.

We are on a tremendous high after spending three days in San Antonio last week exploring that amazing City and meeting so many inspirational peers doing great work in downtowns and neighborhoods nationwide.

Let’s just say it started with a bang! LOA Principal Larisa Ortiz gave one of the keynote master talks, sharing a stage with Colorado Governor Hickenlooper (a potential presidential candidate?) and shared her retail philosophy which is rooted in the subject of ecology, known as “microclimates”. Larisa coined the term “retail microclimates”, a concept that is now fundamental to our work at LOA. It was truly a thrill to see our ideas resonate so strongly with an audience of over 1,000 conference attendees!

We were also excited that LOA projects were extremely well represented at the Downtown Achievement Awards through our partners, who were recognized with Excellence Awards in Planning, including:

The plan helped jumpstart a previously dormant BID formation effort in Central Square and has helped the City realign and reprioritize its resources towards policies that enhance the administrative capacity of local merchant associations, advocate for changes in zoning policy that allow for new retail concepts, and programs that embrace the thriving experiential and dining sector.

The City of New York’s Neighborhood 360 Program, which has at its center the Commercial District Needs Assessment tool, is based on a methodology developed by LOA with the support of the Local Initiative Support Corporation (LISC). To date, the City has selected ten neighborhoods to test the Commercial District Needs Assessments (Read them here). The Commercial DNA methodology – as we now call it – will be the subject of an upcoming publication by the Local Initiatives Support Corporation. This publication will be available free of charge and will give commercial district planning entities across the nation a chance to gain a deeper understanding of how to conduct more comprehensive district diagnosis. Stay tuned for updates on the publication – due out this Winter!

We’d like to also extend our congratulations to Stantec for its winning plan for the Oswego Downtown Revitalization Initiative. LOA served as retail consultant on the project team in 2016. The New York State Downtown Revitalization Initiative (DRI) is now in its third year, and LOA has worked in eight of the thirty DRI communities as sub-consultants to larger planning firms. In fact, Larisa’s master talk was peppered with examples from various DRI Communities. Stay tuned for the video of her talk, which received rave reviews!

And let’s not forget our breakout sessions!

LOA Associate, Nur Asri, led a packed session on downtown marketing and Engaging Millennials and Shoppers in the Digital Age. With panelists Aongus Burke (Facebook), Jim Blakeslee (Geocentric), and Brian Carr (Midtown Atlanta), the session covered a range of tools to get digitally-native customers shopping downtown and especially at small local businesses. From downtown websites and apps to Facebook pages and events, there are numerous ways that BIDs and their local merchants can market products and services online. As omni-channel shopping becomes the reality, digital marketing will be fundamental to the overall downtown experience.

Larisa also sat on a panel on Zoning for Retail and participated in a robust discussion about gentrification and neighborhood change. To continue to keep abreast of these very important topics, don’t forget to subscribe to our quarterly CDAdvisor newsletter and follow our blog!